Retail

The Power of Gift Cards

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by Mary Donovan, Retail Gift Card Association |
April 30, 2014

With the increasing popularity of show-rooming, and the competition from online retailers like Amazon, many brick-and-mortar retailers are looking for innovative ways to earn back shopper loyalty, and motivate them to come to their stores. At Amazon, consumers are paying bottom dollar for their favorite products to be delivered in a convenient way. How in the world are traditional retailers supposed to compete with that?

While it takes a number of tools and tactics to effectively compete with the new normal of show-rooming and online retailers, one tactic that is often overlooked in the modern retail environment, especially around the holidays, is the promotion and marketing of gift cards.

Gift cards are not exactly a new addition to the retail marketing landscape, and they might seem like a tired tactic. However, consumer perceptions of gift cards are rapidly changing year-over-year, and they have actually become a consumer favorite due to their flexibility, security, and desirability as gifts.

A recent survey by the Retail Gift Card Association (RGCA) confirmed that Americans love to give and get gift cards, with 74 percent planning on giving at least one, and up to five gift cards this holiday season. In addition, 80 percent reported they like to receive gift cards because they can purchase what they want without spending their own money. Among a number of categories, the favorite type of gift card was for restaurants, followed by department stores, and online marketplaces, respectively.

And what is the best way to drive gift card sales and get consumers in your store? According to the survey, promotions drive gift cards sales — 17 percent of consumers wait for a promotion before buying a gift cards, and 23 percent almost always look for promotions at competing retailers before deciding where to buy a gift card.

Gift cards not only make consumers happy; they also motivate consumers to want to visit your store. According to the survey, 78 percent of consumers plan to spend holiday gift cards at brick and mortar locations.

To capitalize on the January influx of gift card redeemers, retailers should tailor their post-holiday plans to appeal to the majority of consumers who plan to redeem their cards at the physical store location.

Gift card marketing and promotions may seem old school, but the data continues to support the fact that consumers are continuing their love affair with giving and getting gift cards. It’s time to get back on board with the gift card.

Mary Donovan is the executive director of the Retail Gift Card Association (RGCA), a trade association of diverse, closed-loop gift card retailers committed to promoting and protecting the use of gift cards. RGCA members follow a code of principles that promote best-practice standards to help the industry grow in ways that benefit retailers and consumers. Mary has been involved in association management for several years, working with a variety sectors. Her background is in operations, program management and government affairs.